Hertz or Avis (not exactly?)
Sag is the distance from your rear axle to a spot on your rear fender without any weight
Not exactly. With ONLY the weight of the bike, the amount it drops is 'free sag'. Maybe that's what you mean by 'without any weight' ?
Next have someone help you measure the same points with you sitting on your bike with your full weight minus the stand. The difference between the 2 measurements is your sag
Not exactly. It's not the difference between the two (loaded sag<->free sag) but fully loaded sag <-> NO sag (topped out)= race sag.
Sometimes free sag is important..sometimes not. You can use it to determine if your shock spring is right for your weight (the race sag already being correctly set). Jeremy says that measuring free sag on a bike with his suspension is irrelevant.
So...measure the topped out distance (no load on the suspension..from the axle to a straight-up postion to the fender for example), then the distance with the rider on the bike..full gear. That difference is 'race sag'...or commonly just called plain 'sag'.
Then check the free sag. If there is < 3/4" or none..your spring is too soft. If there is a large amount..your spring is too stiff (for your weight).
As far as the point of this thread..seat height:
You'll find you get used to it for one thing..flat out LIKE it, too! I'd hold off shaving your seat foam until you get some more time on it. The more you get used to it, the more you ride, the more you'll find your feet are on the pegs (where they should be, anyway), and seat height becomes less of an issue.
That said...a set of Devol pull rods (dog bones) will lower the bike about 1/2" in the 'long' setting. That from a newer series standpoint. Any lengthening of the pull rods will lower the bike. Will also increase the trail angle. That will 'slow' the low speed handling somewhat..but will also stabilize the high speed handling.